I’ve read with interest a couple of opinions on the GAAR panel this week, mainly focusing on the make up of the interim panel.

One of the opinions I read was from a certain tax enthusiast who was expressing dismay that HMRC were not to be represented on the panel, and that certainly there should be representatives from the public sector or the unions.

Now, I don’t know if this is a case of reverse psychology in action, or whether it’s plain old psychology, but until that point I had been sympathetic to those suggesting that HMRC ought to be represented.

In truth, I hadn’t really considered the make up of the panel except that it should be as independent as possible.

However, to my mind, this line of argument from quarters who are directly linking tax avoidance with public sector cuts basically makes the case for not including HMRC members.

Now, I point out that I think the tax gap argument in the anti austerity drive is deeply flawed. Whilst “closing the tax gap” might seem like a revenue raiser, I don’t necessarily think that it follows.

Any attempt to close the tax gap places additional administrative burdens and financial risks upon all business, both “morally repugnant” businesses and otherwise. This can result in behavioural shifts that cancel out the benefits.

Also, it is debatable whether the evasion element is recoverable at all. Even if money were fully recoverable from criminals, the revenue would not occur in future years because the criminal activity would have ceased.

Anyway, the point about making the comparison is that it highlights the appearance of the conflict of interest arising for any employee of HMRC.

Seeing a direct causal link between avoidance and their employment (or even previous employment?) compromises the appearance of impartiality, if not actual impartiality. Likewise, the suggestion that the panel should include vested interest groups such as unions is similarly flawed.

As to whether “private sector” individuals can be impartial, and be seen to be impartial, is a matter which falls on them on an individual basis. The important thing is that they do not necessarily represent one of the beneficiaries of the dispute.

If they have a significant interest in either side, whether perceived or real, I can’t see how it’s a just idea to allow them to decide how the law is enforced.

Now, I’m not saying that HMRC employees are not capable of being impartial, but the tax gap/austerity conflation offers a very real appearance of a conflict of interest.